A stock has had the following year-end prices and dividends: What are the arithmetic and geometric average
Question:
A stock has had the following year-end prices and dividends:
What are the arithmetic and geometric average returns for the stock?
Transcribed Image Text:
Price Year Dividend $64.10 $1.10 74.05 2 1.25 67.61 4 76.25 1.45 82.70 1.60 1.75 93.15
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To calculate the arithmetic and geometric average returns we must first calculate the return for each year The return for each year is R 1 7405 6410 1106410 1724 or 1724 R 2 6761 7405 1257405 0701 or 701 R 3 7625 6761 1456761 1492 or 1492 R 4 8270 7625 1607625 1056 or 1056 R 5 9315 8270 1758270 1475 or 1475 The arithmetic average return ...View the full answer
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Related Book For
Essentials of Corporate Finance
ISBN: 978-1260013955
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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